May 2012 Health Law Summaries

The following are brief summaries prepared by section volunteers of new developments in Florida health care law that may be of interest to members of the Health Law Section. The summaries are presented for general information only as a courtesy to section members and do not constitute legal advice from The Florida Bar or its Health Law Section.

FRAUD AND ABUSE

The Stark Law – U.S. ex rel Drakeford v. Tuomey Health Care System, Inc., 675 F.3d 394 (4th Cir. 2012)

This is a False Claims Act case bottomed on alleged violations of the Stark Law. At trial, the jury found that the defendant hospital (Tuomey) had violated the Stark Law but not the False Claims Act. On appeal, the Fourth Circuit Court of Appeals reversed the trial court’s judgment on constitutional and procedural grounds and remanded the case for retrial. But in reversing, the Fourth Circuit addressed two threshold Stark Law issues that it believed would recur upon retrial:

  1. Whether the facility component of the services performed by the physicians pursuant to their employment contracts with the hospital, by which Tuomey billed a facility fee to Medicare, constituted a “referral”; and

Whether, assuming that Tuomey considered the volume or value of anticipated facility component referrals in computing the physicians’ compensation, the contracts implicate the “volume or value” standard under the Stark Law. (emphasis by the court)

In addressing these lingering Stark issues, the court looked not only to the language of the Stark Law and the Stark Regulations, but also focused on CMS’ commentary in order to determine the meaning of the term “referral” and whether contracts that are found to have taken into account anticipated referrals implicate the “volume or value” standard set forth in the Stark Law. As to both questions, the court answered in the affirmative. In doing so, the court applied the Stark Law and the Stark Regulations as interpreted by CMS citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). As the court noted, under Chevron, we “are instructed to defer to the reasonable interpretations of expert agencies charged by Congress to fill any gap left, implicitly or explicitly, in the statutes they administer.” See footnote 21.

If faced with the same facts, it is reasonable to conclude that the Eleventh Circuit Court of Appeals would also apply Chevron and reach a similar result. In other cases the Eleventh Circuit, when interpreting ambiguous statutes, has consistently deferred to rational agency interpretations, citing Chevron. See, e.g., Raniolo v. Commr. of Soc. Sec., 2012 WL 952299 (11thCir. 2012).

The appellate briefs are available on PACER and are worth reading.

Reported By: Robert V. Williams

PROFESSIONAL LICENSURE

Fernandez v. Department of Health, 37 Fla. L. Weekly, D677 (4th DCA March 21, 2012). The Fourth District Court of Appeal recently reversed a final order of the Board of Nursing permanently revoking a nurse’s license. The licensee was charged with failing to meet the minimal standards of acceptable nursing practice and with unprofessional conduct. The nurse requested an informal hearing before the Board, but failed to appear for the hearing. The Board permanently revoked the nurse’s license. The District Court reversed the final order because the final order did not specify the specific aggravating factors that allowed the Board to exceed the penalty guidelines in Fla. Admin. Code R. 64B9-8.006. The Court also reversed because Rule 64B9-8.006 does not provide any penalty guidelines for unprofessional conduct as defined in Fla. Admin. Code R. 64B9-8.005. Each board is required to enact penalty guidelines for each ground for disciplinary action against a licensee. Section 456.079, Florida Statutes.

2012 New Statutes: New laws passed during the 2012 legislative session impacting licensees of the Department of Health have or will soon become effective.

  • Attorneys representing health care providers should be aware of Ch. 2012-64, Laws of Florida, amending §456.0635, F.S. pertaining to bars to issuance or renewal of licensure;
  • Ch. 2012-73, Laws of Florida, amending §943.0585 and §943.059, F.S. to include the Department of Health in the list of agencies who must be informed of expunged or sealed criminal matters;
  • Ch. 2012-160, Laws of Florida, amending various provisions of law dealing with pain management clinics, clinical laboratories, urgent care centers and health care clinics;
  • Ch. 2012-170, Laws of Florida, amending provisions related to the licensure of physician assistants in §458.347 and 459.025, F.S.;
  • Ch. 2012-197, Laws of Florida, amending §627.736, F.S. to require that a clinic otherwise exempt from licensure as a health care clinic must either be licensed as such or specifically exempted from such licensure in order to collect PIP reimbursements;
  • Ch. 2012-155, Laws of Florida, amending the requirements set forth in §39.201, F.S. for mandatory reporting of known or suspected child abuse;
  • Ch. 2012-184, Laws of Florida, amending §458.309 and §459.005, F.S. regarding restrictions on the volume of liposuction performed in an office surgery setting;
  • Ch. 2012-14, Laws of Florida amending the licensure by examination requirements for dentists and dental hygienists and expanding the scope of practice of dental hygienists to include the administration of local anesthesia.

Reported By: Allen R. Grossman and Michael L. Smith

LIFE SCIENCES

During the 2012 session, the Florida legislature passed a number of bills affecting Chapter 499, which contains provisions governing pharmaceutical wholesalers. Two bills contained significant changes. CS/HB 571, which becomes effective on July 1, 2012, modifies the definition of “distribute” to exclude billing and invoicing activities. It defines “active pharmaceutical ingredient” and circumstances under which these chemicals may be imported into Florida without a license. It also allows one permit for contiguous suites, units, floors or buildings under common operation or control. The bill allows certain entities to avoid having to obtain a repackager permit to repackage drugs for their own use. It also establishes recordkeeping requirements for persons receiving drugs from exempt entities. SB 364, which also takes effect on July 1, relates to blood establishments and requires certain establishments to obtain a restricted prescription drug distributor permit.

Florida's Department of Business and Professional Regulation ("DBPR") may soon start auditing pharmaceutical distributors to determine whether they are complying with Florida's laws regarding reporting of controlled substances. Effective July 1, 2011, certain distributors were required to register with the DBPR Controlled Substance Reporting database and submit monthly reports. Many companies with DEA numbers have not yet registered. More information is available at this link: http://www.myfloridalicense.com/dbpr/ddc/CSR.html.

Reported By: Shannon Hartsfield Salimone

HEALTH INFORMATION TECHNOLOGY & PRIVACY

On March 24, 2012, the Office of Management and Budget accepted the omnibus HIPAA rule for its 90 day cost/benefit analysis review. The final rules will modify the HIPAA Privacy, Security, Enforcement and Breach Notification Rules as necessary to implement Subtitle D of the Health Information Technology for Economic and Clinical Health Act, as well as the Genetic Information Nondiscrimination Act of 2008. Additional information on the rule and its status is available through the following website: http://www.reginfo.gov/public/jsp/EO/eoDashboard.jsp.

HIPAA changes may be coming this summer. On June 7, 2012, at a conference hosted by the HHS Office for Civil Rights (OCR) and the National Institute of Standards and Technology, Leon Rodriguez, the director of OCR, stated, “Our final omnibus rule is very close. I can say that with confidence.”

Reported By: Shannon Hartsfield Salimone

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